Capitalising on excellent political relations and high economic growth, private companies from India and Saudi Arabia are exploring investment opportunities in the other country.
The visit of King Abdullah to India in January 2006 laid the foundations of the contemporary relationship between the two countries. Through the ?Delhi Declaration?, signed during the visit, the two countries committed themselves to pursuing a joint strategic vision to promote bilateral ties for mutual benefit as well as for the peace and security of the region as a whole.
?Based on the road map set out in the Delhi Declaration our bilateral relations have been strengthened with regular visits at ministerial level and stronger economic ties based on substantial trade ties and investments. Today, Saudi Arabia is India?s fourth largest trade partner, with bilateral trade being valued at over $25 billion,? Faisal Hassan Ahmed Trad, ambassador of Saudi Arabia to India, said.
Indian investments in Saudi Arabia have also increased significantly since King Abdullah?s visit and today, there are over 550 small and medium Indian enterprises in the kingdom.
Saudi Arabia is steadily developing its non-oil sectors. The Kingdom, which is rich in several minerals such as gold and phosphate, is increasingly opening up its infrastructure, energy, industrial and services sectors, throwing up excellent possibilities for investments and joint ventures for Indian companies. There isn?t a single major Indian project in Saudi Arabia so far.
The Saudi envoy told FE, ?Both countries are witnessing a new and dynamic phase in their bilateral ties. There is increased cooperation in sectors including information services, biotechnology, nanotechnology and space. India has one of the largest scientific and technical pools of manpower in the world and is known for the excellence of its knowledge-based industries. The development of the knowledge economy promises to be a major joint endeavour.?
?The governments of both the countries are taking all necessary steps to facilitate private investment and trade,? added Trad.
A significant role in bringing the two countries together has been played by the expat Indian community. It is not surprising that Indians, now numbering nearly two million, constitute the largest expatriate community in Saudi Arabia. Almost 25 % of remittances from the Gulf region are from the kingdom, said the envoy.
?Saudi Arabia is one of largest suppliers of oil to India, which is also one of our top seven trading partners,? said the diplomat. A number of Saudi-Indian joint ventures, ranging from the banking and insurance sectors to the industrial and services sectors, are currently operating in both countries. ?These close business ties are being translated into joint investment opportunities and entities after the liberalisation of investment rules announced by the Saudi Arabian General Investment Authority,? he said.
The visit of Prime Minister Manmohan Singh to Saudi Arabia in February 2010 resulted in the ?Riyadh Declaration?, which articulates the similarity of assessment and approach of the two countries on regional and global issues, and also the commitment to promote ties in political, security, defence and economic areas.
New areas of cooperation that the two countries will now pursue vigorously include education, science and technology. The two countries are also expected to commit themselves to join forces to combat the scourge of extremism and violence, which are a threat to all countries in the region.
According to officials, Saudi Arabia is seeking investments from India in various sectors including information technology, energy and infrastructure among others. The country needs $ 1.4 trillion investment in various sectors.
?Apart from the traditional exports of basmati rice, textiles and jewelleries, Saudi Arabia offers huge investment opportunities in promising sectors like IT, infrastructure, energy and services for India,? according to government official. India is the fifth largest trading partner for Saudi Arabia and the bilateral trade during 2010 fiscal stood at $ 21 billion, the official said. There is a need for diversifying the trade basket of the two countries. ?We need to move up the value chain. The sectors of potential for investments in Saudi Arabia relate to oil and gas, education, pharmaceuticals and biotechnology, and manufacturing industries such as chemicals, plastics and food processing,? the official added.
Recently, Saudi Arabia?s Al Qahtani Sons Group signed a joint venture agreement with Indian firm SledgeHammer Oil Tools to build one of the largest manufacturing plants for oilfield and drilling equipment in the Gulf nation.
India-Saudi economic relations have shown remarkable growth with bilateral trade registering a three-fold increase in the last five years. Bilateral trade of the two countries was nearly $21 billion in 2009-10.